Bankruptcy

Interpreting Florida's New $4,000 Personal Property Exemption

By Jonathan Alper

The Florida Constitution gives debtor?s a $1,000 exemption in all personal property such as cloths, furniture, and cash in financial accounts. The Florida legislature enacted a new law in July, 2007, providing debtors an additional $4,000 "wildcard" exemption in personal property provided that the debtor does not claim a homestead exemption. Several questions have come up in recent bankruptcy cases concerning the $4,000 statutory exemption: for instance, can debtors stack the $4,000 statutory wildcard exemption on top of the $1,000 Constitutional exemption? Do joint bankruptcy debtors each get the benefit of a $4,000 statutory exemption?; and if a debtor owns a homestead but elects to abandon the homestead in bankruptcy without claiming exempt homestead equity, can the debtor claim the $4,000 statutory exemption?

The bankruptcy courts have so far liberally construed the new, $4,000 statutory exemption for personal property. More than one bankruptcy judge has ruled that a debtor can stack the exemption on top of the $1,000 Constitutional exemption provided he does not claim a homestead exemption. Owning a homestead does not disqualify the $4,000 exemption when the debtor does not claim or seek benefit of the homestead exemption. (Therefore, where one spouse files bankruptcy and claims a tenants by entireties exemption in the marital home the debtor spouse should be able to claim the $4,000 wildcard personal property exemption.). When two qualified spouses file bankruptcy courts have held that  each spouse can claim the $4,000 exemption; so, where joint filers do not claim a homestead exemption. ( Or, when both spouses file and the house is "upside down" both spouses should qualify for the $4,000 statutory exemption, and the joint debtors would have a $10,000 exemption applicable to their personal property)

posted by Jonathan Alper, bankruptcy and asset protection attorney, Orlando, Florida

Full post as published by Florida Bankruptcy Law on February 05, 2008 (boomark / email).